Australian School of Business School of Accounting

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  • 1. Australian School of Business School of Accounting ACCT3610 FINANCIAL STATEMENT ANALYSIS COURSE OUTLINE SEMESTER 1, 2009
  • 2. TABLE OF CONTENTS 1. STAFF CONTACT DETAILS 1 2. COURSE DETAILS 1 2.1 Teaching times and Locations 1 2.2 Units of Credit 1 2.3 Summary of Course 1 2.4 Course Aims and Relationship to Other Courses 1 2.5 Student Learning Outcomes 2 3. LEARNING AND TEACHING ACTIVITIES 2 3.1 Approach to Learning and Teaching in the Course 2 3.2 Learning Activities and Teaching Strategies 2 4. ASSESSMENT 3 4.1 Formal Requirements 3 4.2 Assessment Details 3 4.3 Assessment Format 3 4.4 Late Submission 4 5. ACADEMIC HONESTY AND PLAGIARISM 4 6. COURSE RESOURCES 5 7. COURSE EVALUATION AND DEVELOPMENT 6 8. STUDENT RESPONSIBILITIES AND CONDUCT 6 8.1 Workload 6 8.2 Attendance 6 8.3 Special Consideration and Supplementary examinations 6 8.4 General Conduct and Behaviour 7 8.5 Occupational Health and Safety 7 8.6 Keeping informed 7 9. ADDITIONAL STUDENT RESOURCES AND SUPPORT 7 10. COURSE SCHEDULE 9
  • 3. 1. STAFF CONTACT DETAILS LIC/Instructor: Mr Jerry Chen Location: QUAD3058 (Quadrangle Building) Phone: 9385 6930 Email: j.chen@unsw.edu.au Consultation time: 10am – 1pm Thursday For security reasons staff can only respond to emails from your official university account. This way we can verify that we are communicating with the correct student. It is your responsibility to check this account regularly. If you prefer to use a different address please ensure that your UNSW email is forwarded and that you include your name and student ID when communicating with staff or other students. 2. COURSE DETAILS 2.1 Teaching times and Locations Wednesday 12:00 – 3:00pm Quadrangle Building G053 2.2 Units of Credit This course has a total of 6 units of credit. 2.3 Summary of Course This course provides a comprehensive framework for using financial statement data in a variety of business analysis and valuation contexts. Fundamental analysis techniques are examined in details with particular emphasis on the application of these techniques in equity (share) valuation decisions. The course comprises two related parts. Part 1 outlines the four basic steps in the framework for business analysis with financial statements: business strategic analysis, accounting analysis, financial analysis and prospective analysis. Part 2 applies the above framework to a variety of business analysis and valuation contexts including equity security analysis, credit analysis, and mergers and acquisitions. 2.4 Course Aims and Relationship to Other Courses This course aims to provide students with hands-on experience in financial statement analysis. Students will be exposed to general techniques of financial statement analysis, theoretical concepts, and practical valuation issues. By the end of the course, students are expected to use firms’ financial statement data to understand their performance and estimate their valuation reasonably. This course is offered by the School of Accounting and is generally taken as an elective or disciplinary specialization course in the Bachelor of Commerce, Master of Commerce or Master of Professional Accounting degrees. Because of the interdisciplinary nature of the course, it is a very useful preparatory course for the CPA, CA and CFA programs. To complete the advance topics covered in the course, a certain level of prior knowledge in accounting and finance is assumed. The following courses (or acceptable equivalents) are the minimum prerequisites and must be completed to enroll in the course: ACCT2542 and FINS1613 ACCT3610 Financial Statement Analysis 1/9
  • 4. 2.5 Student Learning Outcomes By the end of this course, you should be able to: 1. recognize financial statement data used in business analysis and valuation; 2. explain basic steps of financial statement analysis, including business strategic analysis, accounting analysis, financial analysis and prospective analysis; 3. apply each step(s) of financial statement analysis in context-specific settings; 4. prepare a valuation report based on financial statement analysis to estimate firm value in context-specific settings; 5. express your ideas coherently and logically when working both independently and cooperatively in both oral presentation sessions and through team project. Course ASB Graduate Attributes Learning Outcomes Critical thinking and problem solving 1,2,3,4 Communication 4,5 Teamwork and leadership 4,5 In-depth engagement with relevant disciplinary knowledge 3,4 Professional skills 4,5 3. LEARNING AND TEACHING ACTIVITIES 3.1 Approach to Learning and Teaching in the Course Consistent with the nature and objectives of the course, emphasis is placed on translating the tools of business analysis and valuation into context-specific settings. To achieve this aim, the course is relatively case and project intensive. This hands-on approach is ideal in illustrating applications of fundamental analysis principles and is effective in facilitating the development of key analytically skills. 3.2 Learning Activities and Teaching Strategies There will be one three-hour seminar each week. The seminar will involve a one- to two-hour lecture component and a workshop that follows the lecture. The workshop may be used to discuss a case, review assigned problems or practice skills. Normally case studies will be discussed in the week following the related lecture. You should bring your prescribed textbook and a calculator to each class. Seminar questions may be provided in class and posted on WebCT in the week prior to the related seminar. It is essential that, prior to a seminar, you read the relevant course materials and prepare written responses to assigned questions. Seminar questions often require additional research beyond the normal prescribed readings. Self study is a key element of the learning design of this course. In most sessions readings and self study materials will be provided in class and/or posted on WebCT to facilitate deeper learning of core elements of the course. The aim of these self-study materials is to encourage you to assume responsibility in the learning process, and to broaden your understanding of the material covered in class. Please note that there are no reading sets ACCT3610 Financial Statement Analysis 2/9
  • 5. required to be purchased at the start of the course. All additional reading materials will be distributed in class. 4. ASSESSMENT 4.1 Formal Requirements Satisfactory performance in all components of the course is required to gain an overall passing grade. An examination mark of less than 50% is considered unsatisfactory performance. Further details of assessment tasks are outlined below. 4.2 Assessment Details The assessment items and composite marks will be calculated as follows: Assessment Weighting Learning ASB Graduate Length Due Date Task Outcomes Attributes Assessed Assessed 1. Weekly case 20% 1,2,3,5 1,2,3,6 30-40 Ongoing presentation minutes 2. FSA project 30% 1,2,3,4,5 1,2,3,5,6 3,500 Week 12, report words 5th June 3. Final 50% 1,2,3 1,5 2 hours Formal examination exam period 100% 4.3 Assessment Format A weekly case presentation (weight 20%), a financial statement analysis (FSA) project report (weight 30%) and a two-hour written examination (weight 50%) PLEASE NOTE: Both weekly case presentation and FSA project will be completed based on team work. Each team will be composed of 4 or 5 students. Team members will be assigned by the instructor in Class 1. (1) Weekly Case Presentation (20%) The weekly case presentation is aimed at developing your understanding of FSA techniques, developing your capabilities to cooperate with other syndicates and building your skills to communicate your comprehension effectively. Each team will be assigned a case (as outlined in far right column of the course schedule) by the instructor in Class 1. The presentation should be designed to answer questions provided in the relevant case and the format (e.g. individual or team presentation) will be decided by the team. The presentation will generally last for 30 – 40 minutes followed by team members answering questions from other students as well as the instructor. Weekly case presentation starts in Class 2 and ends in Class 11. Each team will be required to submit a written report at the start of the class in the week following their presentation. The report should be a maximum of two (2) pages, with an additional two (2) pages allowed to show any calculations, graphs, figures or exhibits. Any additional pages will not be considered when marking your assignments. Please use a ACCT3610 Financial Statement Analysis 3/9
  • 6. minimum font size of Times Roman 12 point (or equivalent), with at least 1.5 line spacing (i.e., no single spacing) and margins of at least 2.5cm (top, bottom, left and right). You may use bullet points. Marks WILL BE DEDUCTED if you do not comply with these formatting requirements. Assessment will be based on quality of the presentation and report. An overall team mark (out of 20) will be awarded to each student of the team but the instructor reserves the right to provide a reduced mark where a student has provided a sub-standard contribution to team activities. (2) Financial Statement Analysis Project (30%) The FSA project is aimed at developing your understanding of, and practical skills in financial statement analysis and valuation. It is also designed to enhance teamwork, and analytical and communication skills. Upon successful completion of the project you will have acquired a working knowledge and practical skills in undertaking an equity valuation using ‘leading-edge’ financial statement analysis techniques. From past experience, the final report often provides excellent evidence of your analytical skills that can be presented to prospective employers when applying for jobs. To complete this project, each team is required to: • select an industry and company within the industry for analysis (available industries and companies will be posted on the course website during Week 1); • notify the instructor of your team’s selected industry and company by Week 3; • progressively analyze your company using the strategic, accounting, financial, and prospective analysis tools identified in the course and submit your progressive analysis when randomly collected; • present your project report in the final class (Class 12); • submit your written report to the instructor by 5pm, Friday 5 June (Week 12). An overall group mark (out of 30) will be awarded to each student of the team but the instructor reserves the right to provide a reduced mark where a student has provided a sub- standard contribution to group activities. Further details on the nature and requirements of the project will be provided in Week 2 and your progress will be regularly discussed throughout the course. (3) Final Examination (50%) The final examination will be a two hour examination at a time to be advised via the examination timetable. All material covered in the course is examinable and the exam content will be similar in spirit to the end-of-chapter questions provided in the textbook. Please note that you must pass the final examination to pass the course. 4.4 Late Submission No late submission is permitted. 5. ACADEMIC HONESTY AND PLAGIARISM The University regards plagiarism as a form of academic misconduct, and has very strict rules regarding plagiarism. For UNSW’s policies, penalties, and information to help you avoid plagiarism see: http://www.lc.unsw.edu.au/plagiarism/index.html as well as the guidelines in the online ELISE tutorial for all new UNSW students: http://info.library.unsw.edu.au/skills/tutorials/InfoSkills/index.htm. ACCT3610 Financial Statement Analysis 4/9
  • 7. Plagiarism is the presentation of the thoughts or work of another as one’s own.* Examples include: • direct duplication of the thoughts or work of another, including by copying work, or knowingly permitting it to be copied. This includes copying material, ideas or concepts from a book, article, report or other written document (whether published or unpublished), composition, artwork, design, drawing, circuitry, computer program or software, web site, Internet, other electronic resource, or another person’s assignment without appropriate acknowledgement; • paraphrasing another person’s work with very minor changes keeping the meaning, form and/or progression of ideas of the original; • piecing together sections of the work of others into a new whole; • presenting an assessment item as independent work when it has been produced in whole or part in collusion with other people, for example, another student or a tutor; and, • claiming credit for a proportion a work contributed to a group assessment item that is greater than that actually contributed.† Submitting an assessment item that has already been submitted for academic credit elsewhere may also be considered plagiarism. The inclusion of the thoughts or work of another with attribution appropriate to the academic discipline does not amount to plagiarism. Students are reminded of their Rights and Responsibilities in respect of plagiarism, as set out in the University Undergraduate and Postgraduate Handbooks, and are encouraged to seek advice from academic staff whenever necessary to ensure they avoid plagiarism in all its forms. The Learning Centre website is the central University online resource for staff and student information on plagiarism and academic honesty. It can be located at: www.lc.unsw.edu.au/plagiarism The Learning Centre also provides substantial educational written materials, workshops, and tutorials to aid students, for example, in: • correct referencing practices; • paraphrasing, summarising, essay writing, and time management; • appropriate use of, and attribution for, a range of materials including text, images, formulae and concepts. Individual assistance is available on request from The Learning Centre. Students are also reminded that careful time management is an important part of study and one of the identified causes of plagiarism is poor time management. Students should allow sufficient time for research, drafting, and the proper referencing of sources in preparing all assessment items. * Based on that proposed to the University of Newcastle by the St James Ethics Centre. Used with kind permission from the University of Newcastle † Adapted with kind permission from the University of Melbourne. 6. COURSE RESOURCES Prescribed Textbook Palepu, K. G., P. M. Healy, and V. L. Bernard, Business Analysis and Valuation Using Financial Statements: Text and Cases, 4th ed., South-Western College Publishing, 2007. Students should ensure that their copy of the textbook also includes the related financial analysis and valuation software disk, which will be needed during the course. Course Website ACCT3610 Financial Statement Analysis 5/9
  • 8. A course website will be maintained within the University’s WebCT/E-Learning environment. Your are required to have a Unipass and Unipin and be enrolled in the course to access this website. The WebCT/E-Learning site is where announcements, copies of lecture outlines, seminar questions, and other materials will be posted. 7. COURSE EVALUATION AND DEVELOPMENT Each year feedback is sought from students and other stakeholders about the courses offered in the School and continual improvements are made based on this feedback. UNSW's Course and Teaching Evaluation and Improvement (CATEI) Process (http://www.ltu.unsw.edu.au/ref4-5-1_catei_process.cfm) is one of the ways in which student evaluative feedback is gathered. Significant changes to courses and programs within the School are communicated to subsequent cohorts of students. 8. STUDENT RESPONSIBILITIES AND CONDUCT 8.1 Workload It is expected that you will spend at least ten hours per week studying this course. This time should be made up of reading, research, working on exercises and problems, and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater. Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities. 8.2 Attendance Your regular and punctual attendance at lectures and seminars is expected in this course. University regulations indicate that if students attend less than eighty (80) per cent of scheduled classes they may be refused final assessment. 8.3 Special Consideration and Supplementary examinations The School of Accounting follows the UNSW and Australian School of Business (ASB) policy and process for special consideration and supplementary examinations. UNSW Policy and Process for Special Consideration (See https://my.unsw.edu.au/student/atoz/SpecialConsideration.html) • Applications for special consideration (including supplementary examinations) must go through UNSW Central administration (within 3 working days of the assessment to which it refers) – applications will not be accepted by teaching staff; • Applying for special consideration does not automatically mean that you will be granted additional assessment or that you will be awarded an amended result; • If you are making an application for special consideration (through UNSW Central Administration) please notify your Lecturer in Charge; • Please note that a register of applications for Special Consideration is maintained. History of previous applications for Special Consideration is taken into account when considering each case. ASB Policy and Process for Special Consideration and Supplementary Exams in Undergraduate Courses ACCT3610 Financial Statement Analysis 6/9
  • 9. In the ASB, requests for special consideration are determined by a Faculty wide panel which will advise the Lecturer in Charge of appropriate action. If the Faculty panel (see above) grants a special consideration request, this may entitle the student to sit a supplementary examination. In such cases the following procedures will apply: • Supplementary exams will be scheduled centrally and will be held approximately two weeks after the formal examination period. Actual date will be advised by mid- semester. • Where a student is granted a supplementary examination as a result of a request for special consideration, the student’s original exam (if completed) will not be marked and only the mark achieved in the supplementary examination will count towards the final grade. The ‘ASB Policy and Process for Special Consideration and Supplementary Exams in Undergraduate Courses’ is available at: http://wwwdocs.fce.unsw.edu.au/fce/current/StudentSuppExamProcedure.pdf . Further information for undergraduate students is on the ASB website (see ‘Policies and Guidelines for Current Students’). 8.4 General Conduct and Behaviour You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class. More information on student conduct is available at: www.my.unsw.edu.au 8.5 Occupational Health and Safety UNSW Policy requires each person to work safely and responsibly, in order to avoid personal injury and to protect the safety of others. For more information, see https://my.unsw.edu.au/student/atoz/OccupationalHealth.html. 8.6 Keeping informed You should take note of all announcements made in seminars or on the course web site. Following each session, lecture notes, summary solution points, spreadsheets and additional reading materials will be available on the course website. If you miss a seminar, you should consult the website prior to seeking information from the course instructor. Also, important announcements may be directly forwarded to your university e-mail address without a follow up paper copy. In all cases, you will be deemed to have received this information. 9. ADDITIONAL STUDENT RESOURCES AND SUPPORT The University and the ASB provide a wide range of support services for students, including: • ASB Education Development Unit (EDU) (www.business.unsw.edu.au/edu) Academic writing, study skills and maths support specifically for ASB students. Services include workshops, online and printed resources, and individual consultations. EDU ACCT3610 Financial Statement Analysis 7/9
  • 10. Office: Room GO7, Ground Floor, ASB Building (opposite Student Centre); Ph: 9385 5584; Email: edu@unsw.edu.au • UNSW Learning Centre (www.lc.unsw.edu.au ) Academic skills support services, including workshops and resources, for all UNSW students. See website for details. • Library training and search support services: http://info.library.unsw.edu.au • UNSW IT Service Desk: Technical support for problems logging in to websites, downloading documents etc. Library, Level 2; Ph: 9385 1333. Website: www.its.unsw.edu.au/support/support_home.html • UNSW Counselling Service (http://www.counselling.unsw.edu.au) Free, confidential service for problems of a personal or academic nature; and workshops on study issues such as ‘Coping With Stress’ and ‘Procrastination’. Office: Level 2, Quadrangle East Wing ; Ph: 9385 5418 • Student Equity & Disabilities Unit (http://www.studentequity.unsw.edu.au) Advice regarding equity and diversity issues, and support for students who have a disability or disadvantage that interferes with their learning. Office: Ground Floor, John Goodsell Building; Ph: 9385 4734 ACCT3610 Financial Statement Analysis 8/9
  • 11. 10. COURSE SCHEDULE Textbook Class Date Topic Case study Reading* Introduction 1 11 March PH 1 Overview/BAV framework The Dot-Com 2 18 March Strategy analysis PH 2 Crash (p. 1-12) Investec Accounting analysis 3 25 March PH 3 Corporation Introduction (p. 2-21) Accounting analysis Harnischfeger 4 1 April PH 4 Implementation (p. 3-20) Lucent 5 8 April Financial analysis PH 5 Technologies (p. 4-49) Mid-semester break Prospective analysis 6 22 April PH 6 UPS (p. 5-43) Forecasting Krispy Kreme Prospective analysis 7 29 April PH 7 Doughnuts Valuation theory and concepts (p. 6-24) Prospective analysis Restaurant 8 6 May PH 8 Valuation implementation Industry (p. 7-23) Home Depot in 9 13 May Equity security analysis PH 9 the New Millen. (p.8-20) Credit analysis Merrill Lynch in 10 20 May PH 10 2003 (p. 9-19) Amazon.com 11 27 May Mergers and acquisitions PH 11 (p. 10-20) 12 3 June FSA project presentation *PH: Palepu, K. G. and P. M. Healy, Business Analysis and Valuation Using Financial Statements: Text and Cases, 4th Edith. Please note that additional readings, exercises, problems and cases may be assigned during the course. It is your responsibility to ensure that you are up to date with the requirements prior to attending each seminar. ACCT3610 Financial Statement Analysis 9/9